Home buyers are increasingly searching for ways to reduce their borrowing costs as existing‑home prices continue to climb, reaching a record national median of $396,800 in January. With affordability stretched (especially for first‑time buyers) many are turning to alternative lending structures that can offer initial rate relief.
Adjustable‑rate mortgages, temporary rate buy‑downs, and Federal Housing Administration (FHA) loans are gaining traction as 30‑year fixed mortgage rates ease only gradually. ARMs, in particular, are drawing renewed interest because they typically start with a lower introductory rate. Their share of all home‑purchase mortgage applications recently rose to 8%, with ARM rates running nearly a full percentage point below fixed‑rate loans.
At the same time, more buyers with moderate credit scores or higher debt‑to‑income ratios are exploring FHA loans, which allow down payments as low as 3.5%. As home prices remain elevated, borrowers are increasingly willing to look beyond the traditional 30‑year fixed mortgage to find more affordable pathways into homeownership.